The Next Mortgage Problem

reply to post by hotpinkurinalmint

I don't know about you but I have a nice underpass picked out.

I wish that was a joke.

Who cares? America will be knee deep in another war in 6 months. One that will make the war in Iraq and Afghanistan pale in comparison. This Iran issue is only heating up. A major war is on the horizon and it will be one that will make all of our problems as a country seem quite trivial.

Who cares? You'd better care. Every American citizen had better care.

some people who won't have to go off and fight have been crying war with since the hostage crisis.

It ain't happening....not with the USA involved anyway unless we get dragged into it.

reply to post by iMacFanatic


You are right, the government can only invest so much, the truth about job growth is that is none, meaning counting temp jobs and service jobs as a gain is nothing but a deceiving tactic.

Jobs in areas that can bring enough income for a family to survive and support itself are not there, they are gone to never comeback again.

We need to thank the morons in Washington that while filling their pockets with private interest money help create the crisis we are right now during the 90s with globalization, they never did anything in their policies to protect Americas job force.

Now look what globalization has done to the EU the global crisis that started in the US thanks to unregulated practices is affecting everybody else around world and is no over and is just the beginning of bankrupted nations starting to show the reality of the situation, Spain, Greece and Portugal, is spreading.

Now the bailing out the finacials and too big to fail is moving to bail out banckrupted nations.

More debt to be put on citizens by their governemnts to be owned by the central banks.

More debt bigger deficits, the age of the bubbles are now coming to end to start the age of deficits and debt.

Originally posted by Wildbob77
All those office buildings that have vacancies.

so true. I'm looking for space here in NYC and there's tons of it. lots of empty buildings that were built or renovated during the boom and now sit empty. The owners have issues with the lenders as the lenders often put stipulations in the financing that states the rent cannot go below a certain dollar per square foot amount. The going rate in my current building is about $35 a foot. It's a good building, not an A building but still, rather good. One step down from here, the rate should be in the mid 20's but the lenders put these limits for $31 a foot and now they can't rent their space to anyone thanks to the financing. So, the financers put in limits that result in the owners not being able to rent space which, in turn, creates an issue of nonpayment of debt.

Financers, say hell to Karma.

I'm involved in RE, my father is a CRE attorney, my mother a retired RE agent and my sister a director in a large company that inspects, repairs and manages foreclosed and bank-owned properties. I tell you this so that you appreciate that we have perspective and experience that most outside the industry don't have access to. I can tell you, unequivocably, that the bottom of the RE crisis is nowhere in sight - not yet! First, you have another whole set of ARMs ready to reset this spring. Next, CRE is financed differently that traditional home mortgages - they are much shorter term and generally do not require monthly mortgage payments but balloon payments due typically in 7 to 10 years. The CRE building boom began in 2003 - it is now 2010. The first of those 7-year notes are going to be due this year and a HUGE amount of them cannot be repaid. My sister's company is adding HUNDREDS of new employees in anticipation of this!

To add insult to injury, the average amount of a CRE note is easily 10 times that of an average home. Let's look at the mechanics of how the banks use these notes as "Assets". First, the banks are required to be below a certain asset/loan ratio - meaning that they cannot lend beyond a certain percentage of their assets. They are using the CRE notes as assets as they anticipate repayment of the note. When those default and they take possession of the property, they are going to be forced to revalue the property which is going to trash their asset/loan ratios putting a majority of them deep in the red. Failures will be endemic and unstoppable and there is no way to bail them out again - not for the dollars required.

BUT... believe it or not, this is ultimately a GOOD thing!!! Yes, you read that right, it is a VERY GOOD thing! Why? Well, most of the RE out there has been artificially over-valued - by ALOT! That means that alot of good people have been kept on the sidelines, unable to own a home, start a business etc... The banks and the "investors" have kept these values artifically inflated so that they could use the value of the property as collateral to obtain more capital. Once the trash is purged from the system (Read that as big banks, corporations and the very few who have profitted at our expense) then the system can reset to true market values - not manipulated speculation!

Don't think for even a second that this won't be painful. This is going to make the great depression look like a Sunday picnic in the park. But, sadly, we are going to have suffer for the cure - removing cancer always is!

Originally posted by iMacFanatic
reply to post by hotpinkurinalmint

 

I don't know about you but I have a nice underpass picked out.

I wish that was a joke.

There should be plenty of empty office buildings...... groups of homeless might take notice of that, and with the police and other security being laid off, who'd be there to stop 'us' from moving in....?

So what can happen if you just stop paying? I know they are backed up with foreclosures so you could be sitting rent free for a year before they finally give you a notice, if you are going to default anyway I do not see the logic of giving them money when in the end you will still loose the property. I do not have a mortgage and dont have an informed opinion that situation.

I do have student loans from 1 semester of college(I feel like I got swindled into signing them)*, I am currently unemployed, sitting on 100 credits yet because I have defaulted on the above loans I can not get any funding to finish school, I joined the service in hopes of taking advantage of their student loan re-payment plan only to be told after the fact that I needed to set that up before I left for boot camp, I ended up paying $100 a month for the GI bill for my first year, $1200 total only to get discharged prematurely after 2.5 years of very good service and was denied the GI bill. Now I get 2 calls a day from student loan collectors and told I need to pay now or get another ding on my credit report.

Even when I had money saved up I decided not to pay off my students loans given the fact they recieved so much from the federal government yet still wanted to charge me fees that amount to about 40% of what I borrowed. That just doesn't seem fair. I have always felt the credit system was a way of keeping the middle class in check by keeping them in debt and given how greedy they are I feel like they do not deserve a dime from me.

I want some insight into the credit crisis, could this the beginning of the end for the 'credit score' and 'credit reports'?

Well if it's all going to hell in a handbasket,...

We are all doomed, right?

So why not enjoy the ride.



1 - The real estate market collapses,.... so I get to enjoy the benefits of a very low rate refi.

2 - The stock market tanks,... so I get to enjoy the results of buying on the dip through March 2009 and finding myself with very healthy YTD returns, especially in my 401k.

3 - If the commercial market for real estate tanks, then yes, I will find myself looking for deals there too.



Buy low, sell high is a very hard concept for people to understand let alone act upon.

But since the world is going to hell in a handbasket, I will continue to enjoy the ride.


It just makes sense to me.

reply to post by smirkley

Thats a simple approach as long as it works but when banks stop loaning which many have and the stock market tanks which it will because there will be no growth...

what do you do then?

Its not all about you its about all of us. When only a few prosper sooner or later the sheer weight of those who aren't will drag even the prosperous down.

An economy is healthy when its wealth is broadly distributed...and that is not socialism its a simple reality...

If it isn't then basically we are stuck with aristocrats and serfs....and there are always more serfs.

Originally posted by iMacFanatic

Thats a simple approach as long as it works but when banks stop loaning which many have and the stock market tanks which it will because there will be no growth...

what do you do then?

Its not all about you its about all of us. When only a few prosper sooner or later the sheer weight of those who aren't will drag even the prosperous down.

I dont disagree at all.

And yes, it is about all of us. We are in the same boat.

But I have always lived with the thought that adversity, creates opportunity.

If you have no job, the opportunity is discovering a new career.

If you have no money, the opportunity is discovering new ways of making money.

If you cant borrow money from the bank, the opportunity is discovering new ways to leverage yourself.



No, this isnt an answer, but this thread like many others, is based on fear mongering the paralized, economically. That does more damage to the economy than bad fiscal policy.

When one is enabled and re-enforced with positive enabling choices, the economy on its own becomes less of an issue to an individual. And when a group is enabled and positively re-enforced, then the 'economy' becomed a tool that changes by the will of those involved.



And right now, in these tough times, we are faced with amazing opportunities for those inclined to view them as such. When things get back to normal (and it will once again soon enough), those that found and acted on their opportunities will be rewarded for their sweat and tears.






[edit on 12-2-2010 by smirkley]

Originally posted by iMacFanatic

An economy is healthy when its wealth is broadly distributed...and that is not socialism its a simple reality...

If it isn't then basically we are stuck with aristocrats and serfs....and there are always more serfs.

I am running into more and more college graduates who are saddled with educational loan debt that is double to quintuple the price of my first home, which I bought two years after my (loan free) graduation in the 1970's. No way can these young people enter the housing market with such a debt burden! Let alone even buy a new car to help out the economy.

And they won't be able to be helped out by their parents to buy a house, as past generations did, because their parent's are probably in large debt/saddled with losses in retirement funds.

The push to privatize since the 1980s was really in effect war profiteering in a de facto War on the Middle Class.

So who is going to be able to buy real estate in the future?

The last time I saw even half the empty CRE in my town was the late 1980-90s.

We were warned by Bin Laden in 2001 that our economy would implode. We have met the enemy, and it's homegrown. With all the howl over relocating foreign prisoners, the real enemy combatants are still out there continuing to pillage the economy.